Prouty & Weller v. General Services Administration , 2014 MSPB 90 ( 2014 )

UNITED STATES OF AMERICA
MERIT SYSTEMS PROTECTION BOARD
2014 MSPB 90Docket No. CB-0752-15-0112-I-1 1
Prouty & Weller,
Appellants,
v.
General Services Administration,
Agency.
December 24, 2014
Debra L. Roth, Esquire, Julia H. Perkins, Esquire, and William L.
Bransford, Esquire, Washington, D.C., for appellant Prouty.
Alan L. Lescht, Esquire, Washington, D.C., for appellant Weller.
Floyd Allen Phaup, II, Esquire, and Sara Ryan, Esquire, Washington,
D.C., for the agency.
Ann F. MacMurray, Denver, Colorado, for the agency.
BEFORE
Susan Tsui Grundmann, Chairman
Anne M. Wagner, Vice Chairman
Mark A. Robbins, Member
1
This matter is a consolidation of two cases, Paul Prouty v. General Services
Administration, MSPB Docket No. DE-0752-12-0396-I-1, and James Weller v. General
Services Administration, MSPB Docket No. DA-0752-12-0519 I-1. As explained more
fully below, the Board has consolidated these matters pursuant to 5 C.F.R.
1201.36(a)(1), (b) under the instant docket number.
2
OPINION AND ORDER
¶1 These cases are before the Board on the General Services Administration’s
(the agency or GSA) petitions for review from the initial decisions which, in both
cases, reversed the appellants’ removals. We have consolidated these cases under
MSPB Docket No. CB-0752-15-0112-I-1 because we have determined that doing
so will expedite their processing and not adversely affect the parties’ interests.
5 C.F.R. § 1201.36(a)(1), (b). For the reasons set forth below, we AFFIRM the
initial decisions as MODIFIED. Both removals are REVERSED.
BACKGROUND
¶2 Before discussing the particular facts of these cases, it is necessary to
briefly explain the undisputed and widely reported context in which they arose.
In 2010, the agency hosted the Public Buildings Service’ (PBS) Western Regional
Conference (2010 WRC), an extravagant, $823,000 conference, in Las Vegas,
Nevada. In December 2010, after hearing concerns about possible excessive
spending and employee misconduct in connection with the 2010 WRC, the
agency’s Deputy Administrator contacted the Office of Inspector General (OIG).
Following an investigation, on April 2, 2012, the OIG issued a Management
Deficiency Report on documented waste and abuse at the 2010 WRC. The report
found that a series of significant irregularities had occurred and concluded that
the agency violated federal limits on conference spending. MSPB Docket
No. DE-0752-12-0396-I-1, Initial Appeal File (Prouty IAF), Tab 16 at 60-62,
68-90. 2 Specifically, the OIG found that: (1) “spending on conference planning
was excessive, wasteful, and in some cases impermissible”; (2) the agency “failed
to follow contracting regulations in many of the procurements associated with the
WRC and wasted taxpayer dollars”; (3) the agency “incurred excessive and
2
Where the documents are identical, we have cited only to the Prouty file.
3
impermissible costs for food at the WRC”; (4) the agency “incurred
impermissible and questionable miscellaneous expenses;” and (5) the agency’s
“approach to the conference indicates that minimizing expenses was not a goal.”
Id. at 71-72. The OIG found essentially that responsibility for the associated
questionable spending, contracting, and procurement activities lay with the
Region 9 Commissioner and Region 9 staff, who had been assigned responsibility
for the hosting activities and management of funds for the 2010 WRC. The report
produced an understandable national firestorm of reaction, sparking a
congressional investigation into wasteful government spending and hearings by
several congressional committees. The public reaction led to the resignation of
GSA Administrator Martha N. Johnson and the firing of two of her top political
deputies. In her resignation letter, Administrator Johnson admitted that a
“significant misstep” had occurred and that taxpayers’ money had been
“squandered.” In addition, the Region 9 Commissioner’s second-line supervisor,
the PBS Commissioner, was summarily dismissed from his position. And, after
the Region 9 Commissioner himself, who was also the Acting Administrator for
GSA’s PBS, Pacific Rim Region, resigned, a federal grand jury indicted him on
charges of fraud and filing false claims for personal reimbursement.
¶3 Appellant Prouty was the Regional Commissioner of the Rocky Mountain
Region, Region 8, with the PBS, and appellant Weller was the Regional
Commissioner of the Greater Southwest Region, Region 7. On April 19, 2012,
the Acting Commissioner, PBS, proposed that the appellants be removed under
5 U.S.C. § 7543 3 for “Conduct Unbecoming a Federal Employee” based on four
specifications and premised on the deficiency report. The agency asserted, as to
each specification, that the appellants knew or should have known of the
following improprieties: (1) that the number of planning meetings for the
3
Under 5 U.S.C. § 7543, a member of the Senior Executive Service (SES) may be
removed or suspended only for “misconduct, neglect of duty, or malfeasance.”
4
2010 WRC and the number of participants at those meetings were excessive and
improper; (2) that the money spent on food and beverages was excessive or
constituted impermissible spending; (3) that spending on clothing and
“conference mementos” was impermissible; and (4) that, with regard to a team
building exercise, the appellants acquiesced to excessive spending that was
wasteful. Prouty IAF, Tab 16 at 60; MSPB Docket No. DA-0752-12-0519-I-1,
Initial Appeal File (Weller IAF), Tab 5 at 49. After considering the appellants’
replies, the GSA Deputy Administrator issued decisions on June 22, 2012, finding
the charge sustained and warranting the appellants’ removals, effective June 25,
2012. Prouty IAF, Tab 16 at 23; Weller IAF, Tab 5 at 13.
¶4 Following lengthy separate hearings, two different administrative judges
issued initial decisions reversing the removal actions after determining that the
agency failed to establish any of the specifications underlying the charge. Prouty
IAF, Tab 48, Initial Decision (Prouty ID) at 1, 41; Weller IAF, Tab 38, Initial
Decision (Weller ID). As to the first specification, the administrative judge in
the Prouty case found that the agency failed to establish that appellant Prouty
“had directed or had knowledge of and acquiesced in the misconduct” alleged
regarding meetings in 2009, during a period when he was detailed to the position
of Acting Administrator of GSA, noting that there were several levels of
supervisors, including SES members, between appellant Prouty and the meeting
attendees and that travel and budget authorities were delegated to each region.
The administrative judge concluded that, given appellant Prouty’s higher level in
the supervisory chain of command, he had no reason to know the details of the
meetings and travel activities, as that obligation belonged to supervisors at the
regional level. Prouty ID at 30. As to the 2010 planning meetings, which
occurred after appellant Prouty returned from detail to his position as Regional
Commissioner of Region 8, the administrative judge found that the OIG report
5
showed that only two Region 8 employees attended pre-planning meetings.
Finding no evidence in the record of the actual costs and expenses 4 for the
attendance by two Region 8 employees to these meetings, the administrative
judge determined that the agency failed to establish that the expenses were
excessive. Prouty ID at 30. Next, the administrative judge found that the agency
failed to establish that the expenses for six Region 8 employees who attended a
“dry run” of the conference were unreasonable or excessive. The administrative
judge noted that four of those employees made presentations at the 2010 WRC,
that it was uncontroverted that the dry runs were considered necessary and
essential to insure quality presentations and had been agency practice for several
years, and that the agency had failed to submit any evidence as to the actual costs
and expenses for these employees’ attendance at the dry run. 5 The administrative
judge also determined that the agency failed to establish that appellant Prouty
should have called the excessive number of planning meetings and attending
employees to the attention of his peers. Prouty ID at 31. The administrative
judge concluded that the agency failed to show that appellant Prouty knew or
should have known about the number of planning meetings in 2009 and 2010, that
these meetings were within the authority of Region 9 to organize and convene,
and that appellant Prouty did not have direct control over the Regional
Commissioner of Region 9 or its employees to trigger an affirmative duty to
investigate. Prouty ID at 32. Finally, the administrative judge considered the
agency’s allegation that appellant Prouty’s partial attendance at a March 2010
pre-planning meeting established his knowledge of the allegedly excessive
4
It is undisputed that, except for a few discrete receipts and costs summaries, the
agency failed to submit into the record most of the evidence underlying the OIG’s
conclusions. Prouty ID at 28.
5
The administrative judge noted that appellant Prouty did not attend the “dry run” due
to a business conflict and that, in fact, he did not attend the 2010 WRC because of a
family obligation. Prouty ID at 16.
6
expenditures or created an obligation to ensure that all expenses were
appropriate. The administrative judge concluded that the agency failed to
establish that, by attending this meeting, appellant Prouty knew of Region 9’s
plans to spend funds inappropriately or beyond what was allocated for the WRC.
Prouty ID at 32-33. The administrative judge concluded that, because appellant
Prouty did not have any direct control over Region 9 employees triggering an
affirmative duty to investigate, the agency failed to establish that he had directed
or had knowledge of and acquiesced in the misconduct of Region 9 employees.
Prouty ID at 33.
¶5 As to the second specification, the administrative judge determined that the
agency failed to prove that appellant Prouty knew or should have known that the
money spent on food and beverages at the 2010 WRC was excessive or
constituted impermissible spending, noting that the record is devoid of any
evidence that he or any employee from Region 8 was involved in procuring food
for the conference or had knowledge of the procurement contracts entered into by
Region 9. Prouty ID at 33. The administrative judge noted that the agency had
delegated authority for procurement and contracting to each region and concluded
that the agency failed to provide any evidence that appellant Prouty should have
known that the Regional Commissioner of Region 9 was not exercising his
delegated authorities in accordance with applicable laws, rules, or regulations.
Prouty ID at 33-34.
¶6 As to the third specification, the administrative judge found that, except for
an expenditure on commemorative coins and velvet boxes given to all conference
participants, the record was devoid of any evidence that appellant Prouty had any
actual knowledge about any expenditure identified in specification 3. Prouty ID
at 34. In this regard, the administrative judge noted that appellant Prouty had
advised the OIG that, although “he was aware that coins were given to people at
the conference as recognition and were related to all the hard work [they]
performed,” he was not aware of any other recognition or awards during the
7
conference. Prouty IAF, Tab 16 at 93. The administrative judge found no
evidence that a Region 8 contractor who participated in the planning played a role
in the procurement decisions or in the expenditure of the funds, or that appellant
Prouty was advised by Region 9 of these expenses. Prouty ID at 34-35. The
administrative judge further found that the contractor’s hearing testimony was
credible and consistent with other evidence showing the delegation of contracting
and procurement authority to Region 9. Prouty ID at 15. The administrative
judge noted that the evidentiary basis for the agency’s claim that the coins were
inappropriate was a single paragraph finding in the OIG deficiency report, which
stated:
GSA spent $6,325 on commemorative coins “rewarding” all
conference participants (as well as all regional employees who did
not attend the conference) for their work on Recovery Act projects,
along with velvet boxes to hold the coins. These did not qualify as
permissible awards because the coins’ design . . . shows that they
were intended to be mementos of the WRC.
Prouty ID at 36; see Prouty IAF, Tab 16 at 82. 6 The administrative judge found
that the use of coins as commemoratives was not permissible, Prouty ID at 35; see
Prouty IAF, Tabs 39, 41, but she credited the hearing testimony of appellant
Prouty, appellant Weller, and the Regional Commissioner of Region 10 that the
purpose of the coins was to recognize the outstanding performance of the
employees in Regions 7, 8, 9 and 10 for their efforts in timely committing
Recovery Act funds while also continuing regular ongoing business, Prouty ID
at 36-37, see Prouty Hearing Transcript (HT), Volume (Vol.) 8 at 75-76, Vol. 9
at 10-11, 51-52. Assigning this testimonial evidence greater probative weight
than the summary, unsworn, hearsay conclusions submitted in the OIG report, the
administrative judge found that the coins were issued to recognize the employees’
performance and were not merely impermissible mementos. Prouty ID at 36-37.
6
The OIG report contains no affidavits or other sworn testimony regarding the coins.
8
Accordingly, the administrative judge concluded that the agency failed to prove
this element of specification 3 and, in turn, failed to prove that specification by a
preponderance of the evidence. Prouty ID at 37.
¶7 As to the fourth specification, the administrative judge determined that the
agency submitted insufficient evidence to prove actionable misconduct by
appellant Prouty. Prouty ID at 38. Specifically, she found the record to be
devoid of any evidence that appellant Prouty knew that Region 9 engaged in
improper procurement and contracting activities, noting that, as of the date of the
March 2010 planning meeting, no procurements had yet occurred for team
building activities. 7 Prouty ID at 37.
¶8 Similarly, the administrative judge in the Weller case found, as to the first
specification, that although the agency alleged in this specification that appellant
Weller had failed to control costs by permitting 70 employees from his region to
attend the WRC, it provided no evidence or explanation as to why this number of
conference attendees should be deemed untoward or excessive. Weller ID at 3.
The administrative judge determined that documentation produced as part of the
OIG report supported the agency’s conclusion that the decision to convene such a
series of onsite meetings was made with little regard for any notion of reasonable
cost management but that the agency failed to offer any evidence to establish that
appellant Weller was actually responsible for that decision. Weller ID at 4-5.
Rather, the administrative judge concluded that, outside of his personal
appearance at the final “dry run” meeting for the WRC, the evidence established
that appellant Weller possessed no knowledge regarding the WRC planning
meetings until well after the fact, and thus was not in a position to contest or
7
The administrative judge considered appellant’s Prouty’s claim of denial of due
process but found that he did not establish it. Prouty ID at 39-41. That finding has not
been challenged on review, and therefore we do not address it here.
9
otherwise limit the travel costs associated with their frequency and composition.
Weller ID at 6.
¶9 Further, as the administrative judge noted, appellant Weller testified that,
when his region had hosted past conferences, he used procedures to ensure
compliance with applicable rules and regulations, and he therefore had reason to
believe the same held true for Region 9 with respect to the 2010 WRC. Weller ID
at 6; see Weller HT, Vol. II at 33-35, 115. The administrative judge determined
that the consistent testimony of the hearing witnesses established that Region 9,
as the host region for the WRC, was responsible for the logistics of conference
planning, with input from nonhost regions being limited to the content of the
conference itself. Weller ID at 6. He found no evidence that appellant Weller
knew or should have known about the meetings or their composition or that he
played any role in arranging the attendance for the “dry run,” or knew what
attendance would be before the fact. Weller ID at 7. Based on this record, the
administrative judge concluded that it was not possible for appellant Weller to
have controlled the excess costs associated with these events by calling them to
the attention of his peers. Weller ID at 7-8.
¶10 Regarding the second specification, the administrative judge found the
record devoid of any evidence that appellant Weller was involved in procuring
food for the conference or had knowledge of the procurement contracts entered
into by Region 9. The administrative judge found that the contract arrangements
for the food and beverages served at the WRC were exclusively performed by
employees of Region 9, that appellant Weller was not privy to this contracting
process, and that he did not know what the government was actually charged for
any of the catering arrangements at the WRC. Weller ID at 9. The administrative
judge concluded that appellant Weller did not participate in the relevant
purchasing decisions and had no prior notice of the resulting largesse, until
actually partaking of it along with other conference attendees. But even had
appellant Weller reacted at that point, the administrative judge concluded, it was
10
then too late for him to have “stopped these irregularities,” as the agency charged
he should have done. Weller ID at 11-12.
¶11 As to the third specification, the administrative judge determined that it
was the understanding of all involved that contract and procurement decisions for
the WRC were to be made by Region 9, which remained solely responsible for
them, and that, apart from the purchase of the commemorative coins, the agency
failed to establish that appellant Weller either knew or had reason to know of the
particular procurement decisions cited in this specification, prior to his
attendance at the conference itself. Weller ID at 13-15. The administrative judge
considered the same single paragraph in the OIG deficiency report as did the
administrative judge in the Prouty case, crediting the hearing testimony of
appellant Weller, appellant Prouty, and the Regional Commissioner of Region 10
that the purpose of the coins was to recognize the outstanding performance of the
employees in Regions 7, 8, 9 and 10 for their efforts in timely committing
Recovery Act funds while also continuing regular ongoing business. Weller ID
at 15-16, see Weller HT, Vol. I at 262-66, 330-32, Vol. II at 90. The
administrative judge concluded that the record, taken as a whole, did not support
a finding that appellant Weller’s actions with regard to the issuance of the coins
in question constituted conduct unbecoming a federal employee. Weller ID at 17.
¶12 And, as to the fourth specification, the administrative judge found that the
record did not demonstrate that appellant Weller knew or had reason to know that
excessive government funds were being expended on a $75,000 “team-building”
bicycle exercise or that the exercise would result in the improper donation of
agency property (the agency purchased 25 bicycles for the exercise and later
donated them to a local boys and girls’ club, in contravention of federal rules). 8
Weller ID at 20.
8
The administrative judge considered appellant Weller’s claims of denial of due
process and harmful error but found that he did not establish either. Weller ID
11
¶13 The agency has filed petitions for review of the initial decisions, and the
appellants have filed responses in opposition to the agency’s petitions. MSPB
Docket No. DE-0752-12-0396-I-1, Petition for Review (Prouty PFR) File, Tabs 1,
3; MSPB Docket No. DA-0752-12-0519-I-1 (Weller PFR) File, Tabs 1, 3.
ANALYSIS
¶14 On review, the agency contends that the administrative judge in the Prouty
case erred by mischaracterizing its charge of conduct unbecoming as a charge of
failure to supervise subordinates and by analyzing the underlying specifications
of the charge using the standard set forth in Miller v. Department of Health &
Human Services, 8 M.S.P.R. 249 (1981). Prouty PFR File, Tab 1 at 13.
Similarly, the agency contends that both administrative judges erred by holding
that the appellants had no duty to investigate and be informed about the activities
of their peers and that, for members of the SES, 9 the Board should require a
“heightened duty to investigate and inquire,” an obligation that extends beyond
“merely supervising direct reports.” Prouty PFR File, Tab 1 at 14-16; Weller
PFR File, Tab 1 at 4-5.
¶15 As we recently pointed out in Powell v. U.S. Postal Service, 2014 MSPB
89, the Board in Miller determined that a supervisor cannot be held responsible
for the improprieties of subordinate employees unless he actually directed or had
knowledge of and acquiesced in the misconduct. See Miller, 8 M.S.P.R. at 252.
In applying the “knowledge and acquiescence” standard, the Board in Miller
considered the following factors: (1) the knowledge the supervisor has, or should
have, of the conduct of subordinates; (2) the existence of policies or practices
at 26-28. That finding was not challenged on review, and we therefore do not address it
here.
9
The SES was created by the Civil Service Reform Act of 1978, Pub. L. No. 95-454, 92
Stat. 1111, “to ensure that the executive management of the Government of the United
States is responsive to the needs, policies, and goals of the Nation and otherwise is of
the highest quality.” 5 U.S.C. § 3131.
12
within the supervisor’s agency or division which relate to the offending conduct;
and (3) the extent to which the supervisor has encouraged or acquiesced in these
practices and/or the subordinates’ misconduct. Id. at 252-53. The Board stated
in Miller that, “[t]he greater the duty a supervisor has to control those employees
who actually committed the improprieties, the less specific knowledge of the
misconduct the supervisor will be required to have. Where it has been shown that
the supervisor has direct control over the employees committing the violation, the
supervisor’s general knowledge of relevant factors imposes an affirmative duty to
investigate further.” Id. at 253.
¶16 We first note that, importantly, neither notice of proposed removal alleges
that the appellants engaged in misconduct because of a failure to perform a
heightened duty to investigate and inquire. See Prouty IAF, Tab 16 at 59-63. As
the administrative judge in Prouty correctly determined, there are two parts to
each specification—that the appellant in fact knew of the “questionable and
excessive expenditures” in connection with the WRC and thus engaged in
misconduct personal to him, or that he should have known about “the
questionable and excessive expenditures” and acted to prevent them from
occurring. Prouty ID at 27; see Prouty IAF, Tab 16 at 60-62. The Board is
required to review the agency’s decision on an adverse action solely on the
grounds invoked by the agency; the Board may not substitute on its own what it
considers to be a more adequate or proper basis. Gottlieb v. Veterans
Administration, 39 M.S.P.R. 606, 609 (1989). We therefore may not consider in
the context of these appeals whether the appellants’ status as members of the SES
lessens or otherwise affects the agency’s burden of proving the specific
allegations in its misconduct charge.
¶17 Second, the agency contends that the administrative judges failed to
consider its position that the appellants should have known about the
questionable and excessive expenditures because they had an affirmative duty to
inquire and investigate. This assertion, that the administrative judges did not
13
adequately consider this argument, is inaccurate. In fact, for each of the
specifications, the administrative judges first thoroughly reviewed the record
evidence to determine whether the agency established its allegation that the
appellants in fact knew of the activities at issue and then considered whether the
agency established that the appellants should have known of the alleged
misconduct. See Prouty ID at 24-38; see also Weller ID at 3-20. In so
proceeding, the administrative judge in Prouty specifically considered the
agency’s arguments, taking into consideration that the SES is a corps of elite
federal managers held to a very high standard of conduct, and, in each instance,
she determined that the agency failed to establish that an affirmative duty to
investigate was “triggered.” Prouty ID at 24, 31-32, 34-35, 38. Under these
circumstances, the agency has failed to persuade us that the administrative judge
in Prouty erred in relying on Miller or that the administrative judge in Weller
erred in applying those concepts to reach his result.
¶18 As stated, we agree with the administrative judges that applying Miller
and/or its concepts to the facts of these cases does not result in a finding that the
appellants are guilty of the wrongdoing as charged in connection with the
2010 WRC. However, it is clear that, in other situations, Miller can be relied
upon as a basis for agencies to hold supervisors liable for improprieties engaged
in by their subordinates. See, e.g., Miller v. Department of the Navy, 11 M.S.P.R.
518, 521 (1982) (supervisory employee was properly held accountable for
ignoring repeated blatant leave abuse by his subordinates under circumstances in
which the employee should have known of the acts of his subordinates, aside
from an alleged lack of uniformity within the agency in reporting leave during the
relevant time frame). As the administrative judge in Prouty found, application of
the “knowledge and acquiescence” standard under Miller requires consideration
and a balancing of a number of factors which, under certain circumstances, will
render supervisors responsible for the misconduct of their subordinates. Prouty
ID at 26-27. The fact that the agency here did not meet the standard regarding
14
these appellants in no way suggests that agencies may not, in other situations,
rely upon Miller to hold supervisors responsible for the misdeeds of their
employees.
¶19 In its petitions for review, the agency cites Dolezal v. Department of the
Army, 58 M.S.P.R. 64, 72 (1993), aff’d, 22 F.3d 1104 (Fed. Cir. 1994) (Table), as
support for its position that members of the SES are held to a higher standard.
Prouty PFR File, Tab 1 at 15; Weller PFR File, Tab 1 at 9. It is true, as the
agency contends, that the Board in Dolezal declared that the appellant must be
“held to a higher standard of conduct because of his SES status and because his
position made him [the Command’s] highest-ranking personnel policy maker, and
one of a handful of the highest-ranking personnel officers in the entire agency.”
58 M.S.P.R. at 72. That said, the misconduct of the SES appellant in Dolezal was
wholly different from that alleged in these cases. In addition, the Board in
Dolezal did not need to, and therefore did not, address any specific duty on the
part of SES members to investigate wrongdoing by their subordinates and so does
not advance the agency’s cause. Notwithstanding, the overarching principle
expressed in Dolezal to the effect that members of the SES, because of their
status, are held to a higher standard of conduct remains valid.
¶20 We likewise find that the agency’s reliance on Baracker v. Department of
the Interior, 70 M.S.P.R. 594 (1996), is misplaced. Again, it is true, as the
agency argues, that the Board in Baracker held that “the SES is a corps of elite
Federal managers held to a very high standard of conduct.” Id. at 602. The
Board also cautioned in that case that SES employees could not be “insulated
from discipline for behavior that would constitute actionable misconduct” in
every instance, merely because it was “committed by a lower-graded employee.”
Id. Nonetheless, our holding in Baracker does not, as the agency seems to
suggest here, endorse the idea that an agency may relinquish its obligation to
prove charges against an SES employee solely on the basis of his or her status.
15
¶21 We have considered the agency’s challenges on review to the
administrative judges’ specific findings as to each specification but find them
unavailing. For example, regarding the first two specifications of the charge, the
agency contends that the administrative judge erred in concluding that appellant
Prouty had no actual knowledge of the expenditures for the WRC and no
knowledge that should have triggered a duty to investigate. Prouty PFR, Tab 1
at 17-18. In support of its position, the agency challenges the credibility of
appellant Prouty’s hearing testimony that it would have been inappropriate to
investigate how much was being spent on the WRC by Region 9. Id.; see Prouty
HT, Vol. 8 at 99-100 (testimony of appellant Prouty). The agency cites the
hearing testimony of the Region 7 PBS Regional Commissioner that, after the
WRC was concluded and he knew of the OIG deficiency report, he obtained
statistics from Region 9 related to the expenses of the conference, broken down
by region. Prouty PFR File, Tab 1 at 17; see Prouty HT, Vol. 8 at 31-32. The
agency contends that, if Region 7 was able to successfully obtain the cost data for
the 2010 WRC from Region 9, then appellant Prouty also could have obtained the
same information, determined that the costs of the 2010 WRC were excessive,
and used the information to hold his SES peers accountable. Prouty PFR, Tab 1
at 17-18.
¶22 Here, the administrative judge’s findings on specifications 1 and 2 are
based either on undisputed facts or, in significant part, on her assessment of the
credibility of the hearing witnesses, including appellant Prouty. See, e.g., Prouty
ID at 14-16. In this regard, we note that the U.S. Court of Appeals for the
Federal Circuit has ruled that the Board “is not free simply to disagree with an
administrative judge’s assessment of credibility.” Chauvin v. Department of the
Navy, 38 F.3d 563, 566 (Fed. Cir. 1994). Rather, the Board must give deference
to an administrative judge’s credibility determinations where, as here, they are
based, explicitly or implicitly, on the observation of the demeanor of witnesses
testifying at a hearing; the Board may overturn such determinations only when it
16
has “sufficiently sound” reasons for doing so. See Haebe v. Department of
Justice, 288 F.3d 1288, 1301 (Fed. Cir. 2002); accord Walker v. Department of
the Army, 102 M.S.P.R. 474, ¶ 13 (2006). We have thoroughly reviewed the
hearing testimony and documentary evidence from below, and find that the
agency has not presented sound reasons for us to revisit the administrative
judge’s credibility determinations in Prouty or her resultant findings and no basis
upon which to disturb her determination that the agency failed to establish these
specifications. See Yang v. U.S. Postal Service, 115 M.S.P.R. 112, ¶ 12 (2010)
(mere disagreement with the administrative judge’s findings is insufficient to
disturb the initial decision); see also Broughton v. Department of Health &
Human Services, 33 M.S.P.R. 357, 359 (1987) (there is no reason to disturb the
administrative judge’s conclusions when the initial decision reflects that the
administrative judge considered the evidence as a whole, drew appropriate
inferences, and made reasoned conclusions).
¶23 With respect to specification 3, the agency contends that appellant Prouty
should have been aware that funds for the conference were being spent on
clothing (including $3,700 for t-shirts, for instance) because a contractor
designed the branding on vests (to be worn underneath tuxedos for a formal
event), which it contends were purchased in violation of agency policy. Prouty
PFR File, Tab 1 at 19. The agency argues that, although appellant Prouty met
with the contractor up to six times, he “never asked a simple question: what
projects are you working on?” If he had, the agency contends, he would have
been told that the contractor was designing clothing. Id. The contractor,
however, never testified that he designed the branding for the vests or otherwise
was involved in their acquisition and there is no record evidence that the vests, in
fact, had branding on them. See Prouty HT, Vol. 7 at 220-38 (testimony of the
contractor). The agency further contends that appellant Prouty was aware, or
should have been aware, that clothing purchases were improper because he
testified that he had been so informed by his own Regional Counsel, and Region 8
17
had a practice of not spending funds on clothing. Prouty PFR File, Tab 1 at 19.
Although appellant Prouty testified that Region 8 had stopped using t-shirts
because his Regional Counsel was uncomfortable with the agency practice of
using t-shirts, he also testified that the use of t-shirts was widespread at the
agency and that he was unaware that t-shirts were procured for the 2010 WRC.
See Prouty HT, Vol. 9 at 56. Thus, appellant Prouty’s testimony does not, as the
agency alleges, constitute preponderant evidence that he should have been aware
that funds were being spent on clothing in violation of agency policy.
¶24 As to the administrative judge’s determination concerning the expenditures
on the commemorative coins, the agency contends that she did not consider the
testimony of the Regional Commissioners for Regions 7 and 10 that the coins
were given to all employees in their regions without any assessment of their
performance and without regard to the performance evaluations of the employees
who received the coins. Prouty PFR File, Tab 1 at 20; see Prouty HT, Vol. 9
at 22-24, 69-69. It contends that the administrative judge should have concluded
that an award that is putatively to recognize performance cannot be a bona fide
performance award when it is given without any inquiry into or assessment of the
recipient’s performance. Prouty PFR File, Tab 1 at 20.
¶25 As with regard to specifications 1 and 2, the administrative judge’s
findings on specification 3 are based on undisputed facts, her assessment of the
probative value of the hearing evidence and testimony, and her assessment of
credibility of the hearing witnesses, including appellant Prouty. The record
reflects that the administrative judge considered the record as a whole, and we
find that her conclusions are supported by the record. Merely disagreeing with
the administrative judge’s findings and credibility determinations is insufficient
to warrant reversing the administrative judge’s decision. Yang, 115 M.S.P.R.
112, ¶ 12; Broughton, 33 M.S.P.R. at 359. We find no basis for disturbing the
administrative judge’s determination that the agency failed to establish this
specification.
18
¶26 The agency contends on review that specification 4 should have been
sustained because appellant Prouty had actual knowledge that the team building
exercise involving the assembly of bicycles was being contemplated; he
expressed concern about the exercise; and, although he was told by the Region 9
Regional Commissioner that Region 9 would get a legal opinion concerning the
exercise, appellant Prouty never “followed up” and never asked his own Regional
Counsel for a legal opinion. Prouty PFR File, Tab 1 at 20. We disagree. The
agency does not dispute that appellant Prouty and another Regional
Commissioner raised the question of obtaining legal guidance prior to proceeding
and that the Regional Commissioner for Region 9 later provided assurances that,
after the March planning meeting, he obtained legal review for the activities prior
to contracting. Prouty ID at 37-38; see Prouty HT, Vol. 8 at 57, Vol. 9 at 49-51.
The agency has offered no persuasive reason to disturb the administrative judge’s
conclusion that it failed to establish that appellant Prouty had direct control over
Region 9 employees committing the violation, triggering an affirmative duty to
investigate, or that he in his supervisory capacity over subordinate employees
“actually directed or had knowledge of and acquiesced in the misconduct” of the
Regional Commissioner for Region 9 or his subordinate employees. Prouty ID
at 38. Again, the administrative judge’s findings and conclusions are firmly
grounded in the record and so we must give them deference.
¶27 Similarly, as to the Weller case, the agency contends on review that the
administrative judge made findings upon which he should have sustained the first
specification but that he instead erroneously concluded that appellant Weller “had
no responsibility because he had no actual knowledge of the matters cited above.”
Weller PFR File, Tab 1 at 15. Again, the agency’s contentions are based on an
erroneous interpretation of the initial decision. The administrative judge did not
find that appellant Weller had no responsibility because he had no actual
knowledge but rather that the agency simply failed to establish the allegations in
this specification by preponderant evidence. Weller ID at 4-5. Thus, for
19
example, the administrative judge found that, although the agency alleged in this
specification that appellant Weller had failed to control costs by permitting
70 employees from his region to attend the WRC, it provided no evidence or
explanation as to why this number of conference attendees should be deemed
untoward or excessive, Weller ID at 3, and the agency’s petition for review
provides no basis for disturbing this finding. Indeed, as the administrative judge
noted, the only hearing testimony on this subject indicated, without challenge,
that the 70 employees sent to the WRC from Region 7, out of a total number of
approximately 700, was consistent with a formula applied to all participating
regions since at least 2006. Weller ID at 4; Weller HT, Vol. 1 at 253 (testimony
of the former Regional Commissioner for Region 10).
¶28 On review, the agency also contends that appellant Weller failed to meet
with the employees that he had appointed to serve as representatives from
Region 7 on the “planning team” for the WRC as would be expected of a member
of the SES properly concerned with containing the costs of government. Weller
PFR File, Tab 1 at 16. The agency does not dispute, however, that appellant
Weller was several supervisory levels removed from these individuals and so he
was not cognizant of the transgressions nor had any reasonable expectation to
believe that the employees in Region 9 were engaging in wrongdoing. Weller ID
at 5-6. We find no basis for disturbing the administrative judge’s determination
that appellant Weller’s routine delegation of pre-conference planning to the
Region 7 employees, such that he was unaware of the overall number and
composition of onsite meetings, did not violate his fiduciary duties or otherwise
constitute conduct unbecoming a federal employee. Weller ID at 6.
¶29 The administrative judge’s findings that the authority for making logistical
arrangements rested solely with the Regional Commissioner of Region 9 and his
staff are based either on undisputed facts or the corroborated testimony of the
hearing witnesses, including the appellant. Weller ID at 4; see Weller HT, Vol. I
at 239-40, 251-53, 314-15, 324-26 (testimony of Regional Commissioners for
20
Regions 8 and 10); see also id., Vol. II at 99-100 (testimony of appellant Weller).
The agency has not presented sound reasons for us to revisit those findings. We
have thoroughly reviewed the hearing testimony and documentary evidence from
below, and find no basis for disturbing the administrative judge’s determination
that the agency failed to establish this specification. See Yang, 115 M.S.P.R.
112, ¶ 12; see also Broughton, 33 M.S.P.R. at 359.
¶30 Regarding the second specification, the agency contends on review, as it
did below, that appellant Weller’s participation at the conference itself placed
him on notice of the lavish nature of what was provided and should have caused
him to realize that per diem rates had been exceeded. Weller PFR, Tab 1
at 16-21. As the administrative judge correctly noted, however, this aspect of the
agency’s charge, while referenced in its decision letter, was not expressly
included in the appellant’s notice of proposed removal. Weller ID at 10; see
Weller IAF, Tab 5 at 14. Thus, it was not appropriately considered as part of the
charge. See Gottlieb, 39 M.S.P.R. at 609.
¶31 The agency also contends with respect to this specification that the
administrative judge erred in failing to find that, had appellant Weller exercised
his duty to inquire and inform himself, he would have learned that these
expenditures were improper. Weller PFR File, Tab 1 at 19. The agency fails to
cite any evidence or authority concerning the source or scope of such a duty.
Further, the agency does not dispute the administrative judge’s determination that
the contract arrangements for the food and beverages served at the WRC were
exclusively performed by employees of Region 9, that appellant Weller was not
privy to this contracting process, and that he did not know what the government
was actually charged for any of the catering arrangements at the WRC. Weller ID
at 9. Under these circumstances, we find no basis in the agency’s petition for
review for disturbing the administrative judge’s determination that it failed to
establish this specification. See Yang, 115 M.S.P.R. 112, ¶ 12; see also
Broughton, 33 M.S.P.R. at 359.
21
¶32 As to specification 3, the agency contends on review, as it did below, that
appellant Weller is responsible, as a senior executive, for the actions or inactions
of the employees he appointed to serve as representatives from Region 7, who
became aware during the various planning meetings that at least some of these
items would be procured for the WRC, and that he should either have kept
sufficiently apprised via communication with these employees, or he should have
ensured that they possessed the requisite knowledge to determine whether such
purchases were permissible. Weller PFR File, Tab 1 at 21-24. The agency
provides no basis, however, for disturbing the administrative judge’s
determination that appellant Weller selected these employees as planning
representatives, and not for their knowledge of federal acquisition rules or to
troubleshoot whether Region 9 was complying with them, and that it was the
understanding of all involved that contract and procurement decisions for the
WRC were to be made by Region 9, which remained solely responsible for them.
Weller ID at 13-14. Accordingly, the agency’s contentions in this regard do not
provide a basis for disturbing the initial decision.
¶33 As it did in the Prouty case, the agency contends on review that, regarding
the commemorative coins, the administrative judge should have concluded that an
award that is putatively to recognize performance cannot be a bona fide
performance award when it is given without any inquiry into or assessment of the
recipients’ performance and that, “apart from the assertions of the three Regional
PBS Commissioners at the hearing, there was no evidence the coin was a bona
fide award.” Weller PFR File, Tab 1 at 20-23. As with specifications 1 and 2,
the administrative judge’s findings on specification 3 are based on undisputed
facts and the testimony of the hearing witnesses, including appellant Weller. The
record reflects that the administrative judge considered the record as a whole, and
we find that his conclusions are supported by the record, see Yang, 115 M.S.P.R.
112, ¶ 12; see also Broughton, 33 M.S.P.R. at 359, and, as such, we find no basis
22
for disturbing the administrative judge’s determination that the agency failed to
establish this specification.
¶34 The agency contends on review, as it did below, that specification 4 should
have been sustained because one of appellant Weller’s designated representatives
attended meetings at which the team building exercise was being contemplated.
Weller PFR File, Tab 1 at 25. We disagree. The agency does not dispute that
another Regional Commissioner raised the question of obtaining legal guidance
prior to proceeding, and that the Regional Commissioner for Region 9 later
provided assurances that, after the March planning meeting, he obtained legal
review for the activities prior to contracting. Weller HT, Vol. I at 249-51
(testimony of Regional Commissioner for Region 10); id. at 338 (testimony of
Regional Commissioner for Region 8); id., Vol. II at 21 (testimony of appellant
Weller). The agency has offered no persuasive reason to disturb the
administrative judge’s conclusion that it failed to establish that appellant Weller
knew or had reason to know that excessive government funds were being
expended on the bicycle exercise or that the exercise would result in improper
donation of agency property. Weller ID at 38. The administrative judge’s
findings and conclusions are firmly grounded in the record.
¶35 In sum, we conclude that the agency’s petitions for review provide no basis
to disturb the administrative judges’ well-supported findings and ultimate
conclusions that the agency failed to establish its charges. There can be no doubt
that the decisions that were made in the planning and carrying out of the
2010 WRC reflect a disregard of economy and a level of extravagance that have
no place in government. However the agency, by abandoning its duty to produce
evidence in support of its charges against the appellants, as the administrative
judges found, simply did not prove that these particular appellants knew or had
reason to know of these ill-advised planning and purchasing decisions until after
the conference had concluded, at which time no action on their part would have
been effective. We have set forth in this decision any number of matters upon
23
which the agency failed to meet its burden of proof. For example, the agency
failed to submit into the record most of the evidence underlying the OIG’s
conclusions, any evidence as to the actual costs and expenses for employees’
attendance at the dry run, any evidence that appellant Prouty or any Region 8
employee was involved in procuring food for the conference, any evidence that
appellant Prouty knew that Region 9 engaged in improper procurement and
contracting activities, any evidence showing that the number of conference
attendees from Region 7 was excessive, and any evidence that appellant Weller
was involved in procuring food for the conference. We do not speculate as to
what the result might have been had the agency submitted sufficient evidence in
support of its charges. We find only that it failed to do so.
¶36 As we have clearly held in the past, members of the SES, managers, and
supervisors may be held responsible for the misdeeds of their subordinate
employees, where appropriate. See, e.g., Hanna v. Department of Labor,
80 M.S.P.R. 294 (1998) (finding that demotion was an appropriate penalty for a
supervisor charged with not complying with the agency’s policies and, even
worse, encouraging his subordinates to do the same), aff’d, 18 F. App’x 787 (Fed.
Cir. 2001). Similarly, as we have explained above, the principles of Miller
remain applicable for this purpose in public sector cases, particularly where it is
shown that supervisors have direct control over the employees committing the
violation. Miller, 8 M.S.P.R. at 253. Agencies need not leave this to chance.
They may include such managerial obligations in the position descriptions of
supervisors, even SES supervisors, to make clear the extent of their responsibility
over the actions of their subordinates. No change in statute is necessary to
enhance the responsibilities of members of the SES or other managers.
¶37 In light of the record and the agency’s arguments before us, we are
constrained to agree with the administrative judges’ decisions to reverse these
removal actions.
24
ORDER
¶38 We ORDER the agency to cancel the appellants’ removals and to restore
them effective June 25, 2012. See Kerr v. National Endowment for the Arts,
726 F.2d 730 (Fed. Cir. 1984). The agency must complete this action no later
than 20 days after the date of this decision.
¶39 We also ORDER the agency to pay the appellants the correct amount of
back pay, interest on back pay, and other benefits under the Office of Personnel
Management’s regulations, no later than 60 calendar days after the date of this
decision. We ORDER the appellants to cooperate in good faith in the agency’s
efforts to calculate the amount of back pay, interest, and benefits due, and to
provide all necessary information the agency requests to help it carry out the
Board’s Order. If there is a dispute about the amount of back pay, interest due,
and/or other benefits, we ORDER the agency to pay the appellants the undisputed
amount no later than 60 calendar days after the date of this decision.
¶40 We further ORDER the agency to tell the appellants promptly in writing
when it believes it has fully carried out the Board’s Order and to describe the
actions it took to carry out the Board’s Order. The appellants, if not notified,
should ask the agency about its progress. See 5 C.F.R. § 1201.181(b).
¶41 No later than 30 days after the agency tells the appellants that it has fully
carried out the Board’s Order, each appellant may file a petition for enforcement
with the office that issued his respective initial decision in these appeals if the
appellant believes that the agency did not fully carry out the Board’s Order. The
petition should contain specific reasons why the appellant believes that the
agency has not fully carried out the Board’s Order, and should include the dates
and results of any communications with the agency. 5 C.F.R. § 1201.182(a).
¶42 For agencies whose payroll is administered by either the National Finance
Center of the Department of Agriculture (NFC) or the Defense Finance and
Accounting Service (DFAS), two lists of the information and documentation
necessary to process payments and adjustments resulting from a Board decision
25
are attached. The agency is ORDERED to timely provide DFAS or NFC with all
documentation necessary to process payments and adjustments resulting from the
Board’s decision in accordance with the attached lists so that payment can be
made within the 60-day period set forth above.
¶43 This is the final decision of the Merit Systems Protection Board in this
appeal. Title 5 of the Code of Federal Regulations, section 1201.113(c) (5 C.F.R.
§ 1201.113(c)).
NOTICE TO THE APPELLANTS
REGARDING YOUR RIGHT TO REQUEST
ATTORNEY FEES AND COSTS
You may be entitled to be paid by the agency for your reasonable attorney
fees and costs. To be paid, you must meet the requirements set out at Title 5 of
the United States Code (U.S.C.), sections 7701(g), 1221(g), 1214(g) or 3330c(b);
or 38 U.S.C. § 4324(c)(4). The regulations may be found at 5 C.F.R.
§§ 1201.201, 1202.202, and 1201.203. If you believe you meet these
requirements, you must file a motion for attorney fees WITHIN 60 CALENDAR
DAYS OF THE DATE OF THIS DECISION. You must file your attorney fees
motion with the office that issued the initial decision on your appeal.
NOTICE TO THE APPELLANTS REGARDING
YOUR FURTHER REVIEW RIGHTS
You have the right to request review of this final decision by the
United States Court of Appeals for the Federal Circuit. You must submit your
request to the court at the following address:
United States Court of Appeals
for the Federal Circuit
717 Madison Place, N.W.
Washington, DC 20439
The court must receive your request for review no later than 60 calendar
days after the date of this order. See 5 U.S.C. § 7703(b)(1)(A) (as rev. eff.
Dec. 27, 2012). If you choose to file, be very careful to file on time. The court
26
has held that normally it does not have the authority to waive this statutory
deadline and that filings that do not comply with the deadline must be dismissed.
See Pinat v. Office of Personnel Management, 931 F.2d 1544 (Fed. Cir. 1991).
If you need further information about your right to appeal this decision to
court, you should refer to the federal law that gives you this right. It is found in
Title 5 of the United States Code, section 7703 (5 U.S.C. § 7703) (as rev. eff.
Dec. 27, 2012). You may read this law as well as other sections of the
United States Code, at our website, http://www.mspb.gov/appeals/uscode/htm.
Additional information is available at the court's website, www.cafc.uscourts.gov.
Of particular relevance is the court's "Guide for Pro Se Petitioners and
Appellants," which is contained within the court's Rules of Practice, and Forms 5,
6, and 11.
If you are interested in securing pro bono representation for your court
appeal, you may visit our website at http://www.mspb.gov/probono for a list of
attorneys who have expressed interest in providing pro bono representation for
Merit Systems Protection Board appellants before the court. The Merit Systems
Protection Board neither endorses the services provided by any attorney nor
warrants that any attorney will accept representation in a given case.
FOR THE BOARD:
______________________________
William D. Spencer
Clerk of the Board
Washington, D.C.
27
DFAS CHECKLIST
INFORMATION REQUIRED BY DFAS IN
ORDER TO PROCESS PAYMENTS AGREED
UPON IN SETTLEMENT CASES OR AS
ORDERED BY THE MERIT SYSTEMS
PROTECTION BOARD
AS CHECKLIST: INFORMATION REQUIRED BY IN ORDER TO PROCESS PAYMENTS AGREED UPON IN
SETTLEMENT CASES
CIVILIAN PERSONNEL OFFICE MUST NOTIFY CIVILIAN PAYROLL
OFFICE VIA COMMAND LETTER WITH THE FOLLOWING:
1. Statement if Unemployment Benefits are to be deducted, with dollar amount,
address and POC to send.
2. Statement that employee was counseled concerning Health Benefits and TSP
and the election forms if necessary.
3. Statement concerning entitlement to overtime, night differential, shift
premium, Sunday Premium, etc, with number of hours and dates for each
entitlement.
4. If Back Pay Settlement was prior to conversion to DCPS (Defense Civilian Pay
System), a statement certifying any lump sum payment with number of
hours and amount paid and/or any severance pay that was paid with dollar
amount.
5. Statement if interest is payable with beginning date of accrual.
6. Corrected Time and Attendance if applicable.
ATTACHMENTS TO THE LETTER SHOULD BE AS FOLLOWS:
1. Copy of Settlement Agreement and/or the MSPB Order.
2. Corrected or cancelled SF 50's.
3. Election forms for Health Benefits and/or TSP if applicable.
4. Statement certified to be accurate by the employee which includes:
a. Outside earnings with copies of W2's or statement from employer.
b. Statement that employee was ready, willing and able to work during the period.
c. Statement of erroneous payments employee received such as; lump sum leave,
severance pay, VERA/VSIP, retirement annuity payments (if applicable) and if
employee withdrew Retirement Funds.
5. If employee was unable to work during any or part of the period involved, certification
of the type of leave to be charged and number of hours.
28
NATIONAL FINANCE CENTER CHECKLIST FOR BACK PAY CASES
Below is the information/documentation required by National Finance Center to process
payments/adjustments agreed on in Back Pay Cases (settlements, restorations) or as
ordered by the Merit Systems Protection Board, EEOC, and courts.
1. Initiate and submit AD-343 (Payroll/Action Request) with clear and concise
information describing what to do in accordance with decision.
2. The following information must be included on AD-343 for Restoration:
a. Employee name and social security number.
b. Detailed explanation of request.
c. Valid agency accounting.
d. Authorized signature (Table 63)
e. If interest is to be included.
f. Check mailing address.
g. Indicate if case is prior to conversion. Computations must be attached.
h. Indicate the amount of Severance and Lump Sum Annual Leave Payment to
be collected. (if applicable)
Attachments to AD-343
1. Provide pay entitlement to include Overtime, Night Differential, Shift Premium, Sunday
Premium, etc. with number of hours and dates for each entitlement. (if applicable)
2. Copies of SF-50's (Personnel Actions) or list of salary adjustments/changes and
amounts.
3. Outside earnings documentation statement from agency.
4. If employee received retirement annuity or unemployment, provide amount and address
to return monies.
5. Provide forms for FEGLI, FEHBA, or TSP deductions. (if applicable)
6. If employee was unable to work during any or part of the period involved, certification of
the type of leave to be charged and number of hours.
7. If employee retires at end of Restoration Period, provide hours of Lump Sum Annual
Leave to be paid.
NOTE: If prior to conversion, agency must attach Computation Worksheet by Pay
Period and required data in 1-7 above.
The following information must be included on AD-343 for Settlement Cases: (Lump
Sum Payment, Correction to Promotion, Wage Grade Increase, FLSA, etc.)
a. Must provide same data as in 2, a-g above.
b. Prior to conversion computation must be provided.
c. Lump Sum amount of Settlement, and if taxable or non-taxable.
If you have any questions or require clarification on the above, please contact NFC’s
Payroll/Personnel Operations at 504-255-4630.